All Forum Posts by: Sal Mazzone

Hey all- thanks for the help.  Spoke to another broker/lender who advised it would not be an issue after he assessed our personal financial info and rental incomes.  

Brandon Sturgill I do trust them (it's family) but I've already personally signed the contract with them to the seller. If I pull myself out of financing and they do not get approved then that's tricky with the financing contingency. I'm referring to it a commercial because the loan is a commercial loan on a residential property. An LLC cannot get a conventional mortgage.

Originally posted by @Jay Hinrichs:

@Sal Mazzone get the loan as Tenants in Common then flip it over to your LLC.

Jay- are you suggesting purchasing the primary I am trying to acquire as tenants in common or the duplex? I've actually never heard of TIC and just had to do some quick research so I don't know much about it.

I posed the question to my lender about it being a contingent liability and this was the exact response: 

"Because the LLC will be newly formed during the purchase of this commercial deal, the underwriters would qualify you taking on 100% of the financial obligations to that property to qualify you for another purchase."

is it both? 25% AND personal guarantee. The operating agreement hasn't been completed yet, I could lower my percentage. But I would still be personally guaranteeing the loan since it's not a non-recourse 

Everyone keeps mentioning that the taxes are high, and yes they are relative to most states in the country. However, relative to westchester county this area is probably one of the lower cities for taxes. Most of westchester is 1k+ a month in taxes. This doesn't make it a bad rental market, it's close to Manhattan making it desirable, and typically appreciation is higher than most areas. Returns may be slightly lower than other areas of the country, but I have filled all my vacancies in westchester in less than a week. 

I think you did a great job on the deal itself, just got caught in a bad situation when you had to obtain financing quickly. I suggest learning from that and having financing lined up ahead of time- or at least be in talks with lenders to understand their terms or criteria. 

BP community-

I'm in a bit of a situation. I'll try to keep it as simple as possible:

I'm in contract on a duplex that will be a buy and hold rental. Partnering with two other individuals, creating an LLC, and obtaining a commercial loan on the property.

I'm also trying to purchase a new primary home simultaneously, while holding onto my current primary and converting it to a rental. (I have contracts in hand)

My wife and I have very strong W2 income, and we also have another rental property cash flowing decently. Both my primary and my current rental have a decent amount of equity.

The issue is my personal mortgage broker said that since the LLC is newly formed, the entire loan on the duplex would be considered my debt, even though I have two other partners. This will more than likely cause the new primary residence loan to not be issued.

Does anyone have any suggestions for this situation, or any lenders they can recommend that would look at this from a holistic approach?  

(All properties are in Westchester county, New York.)

Originally posted by @Tyler Amburgy:

For most loans that you originate in an LLC a personal guarantee means that you agree to pay the note regardless of whether or not the business can.

The loans that I have with my LLC do not show up on a personal credit report even though I have personal guarantees on them. However, most personal loan applications have terminology that asks if you are responsible for any other debts which would include your business debts.

 Thanks for responding Tyler!

hey guys- I know this thread is about 6 months old but I was wondering what exactly is meant by "personally guaranteeing" the loan. I am assuming this means even if you shut the LLC business down you are still personally liable for the outstanding loan, and that they can come after your personal assets? Also, even if DTI isn't a concern on the commercial loan, does having the commercial loan in the LLC impact your personal DTI ratio for obtaining financing for your own personal property?

Thanks Bryson- any tips on the due diligence from your experience?